First off, my response will be different than quite a few others on here, due to the fact that I like to go for a cheaper route, and DIY it.
Size of Turbo: I'd recommend a TDO4 13C for such a small displacement engine, and they can be found on any turbocharged Volvo. You can find them used for around 100$, (
www.turbobricks.com) and the reason I like them is
1. The waste gate is internal, if you make a good manifold with the right flange and clocking, everything is done internally so there is no need for an expensive external wastegate.
2. These turbos have a Compressor Bypass Valve: read as a Blow Off Valve, again saving you money. Both are on the turbo itself, making it self sufficient.
3. The turbo will run 7.5psi / 8psi stock, which is just about right if you are going to have stock internals.
4. Get a custom manifold (PM TypeSwede, he made one) and the turbo will literally bolt up... once again, PM TypeSwede.
5. The turbo is good until abot 14-15 Psi, whic is about as much as you will ever want to run. While the turbo will not flow as wel as a big Turbonetic T3/T4, but it's a sixth of the cost, and you wont have to have external wastegate and a Blow off valve.
6. Run an intercooler. Period. You are already begging for trouble by turboing a frankenstien motor, and an open block motor. Honestly, be sure you are ready to do this. Intercoolers I would recommend are a front mount of a starion (an old DSM), a Volvo Intercooler will also work, so if you find one with a good 13C, check for the intercooler. ( you can also check
www.turbobricks.com for a Volvo IC)
7. I would recommend one of the 100$ ebay intercooler piping kits. Usually you can cut 'em to fit and they will work fine.
The breaking point of your motor will be more determined by the horsepower you are pushing, and from what i understand, a D Series will usually toss its rods around 200 whp.
Now if you want to do a junkyard kit, you have to understand tuning is the key. I'd recommend probably phearable.net w/ one of the eprom programs. Hondata is of course the best, but quite expensive. Anyways, I just put everything together, you need to find someone who can tune it, and you need to find a programmable ECU of some sort. But either way you are along your way. Start getting parts, and you should be able to make it happen for under 1G. Good Luck. If you have any questions at all, post 'em up.